Market Roundup
- EUR/USD -0.48%, USD/JPY +0.19%, GBP/USD -0.33%, EUR/CHF -0.19%
- DXY +0.37%, DAX -0.85%, FTSE -0.84%, Brent -0.06%, Gold -0.22%
- UK's Hammond, saved from purge, set to renew Brexit push
- UK retail sales fall sharply as consumers feel the hit of Brexit vote inflation
- Great Britain May Retail Sales mm -1.2% vs previous 2.3% revised +2.5%
- Great Britain May Retails sales yy +0.9% vs previous 4.0% revised +4.2%
- EZ Apr Eurostat trade NSA 17.9b vs previous 30.9b
- China central bank left interest rates for open market operations unchanged
- SNB left policy unchanged: Sight deposit rate -0.75%-3m Libor -0.25%-1.25%
- Swiss National Bank could cut rates more if needed - Jordan
- Greece calls for debt relief measures ahead of crunch eurozone meeting
- Oil prices struggle on doubts OPEC can rein in oversupply
- MoF flow data – Japanese buy more for-bonds Jun 10 week, net Y526.6bn
- Foreigners sell net Y143.1 bln Japan stocks, buy JGBs, Y2.77tn bills
Economic Data Ahead
- (0830 ET/1230 GMT) The Federal Reserve Bank of New York is expected to report that manufacturing activity in New York State grew 4.0 percent in June after declining 1.0 percent in May.
- (0830 ET/1230 GMT) The number of Americans filing for unemployment benefits is likely to have decreased by 3,000 to a seasonally adjusted 242,000 for the week ended Jun. 2, while continuing claims for the week ended Jun. 9 is expected to rise to 1.923 m from 1.917 m.
- (0830 ET/1230 GMT) The U.S. Labor Department publishes import and export prices index for the month of May. The import prices are likely to have eased 0.1 percent after rising 0.5 percent in April, while exports are expected to have edged up 0.1 percent after increasing 0.2 percent in the prior month.
- (0830 ET/1230 GMT) Philadelphia Federal Reserve manufacturing survey is likely to show that business activity decreased to 24.0 in June from 38.8 in May.
- (0830 ET/1230 GMT) Statistics Canada releases manufacturing shipments data for the month of April. Manufacturing sales are likely to have increased 0.7 percent after rising 1.0 percent in March.
- (0915 ET/1315 GMT) The Federal Reserve is likely to report that industrial production rose 0.2 percent in May, after increasing 1.0 in the prior month.
- (0915 ET/1315 GMT) The Federal Reserve Board is expected to report that capacity utilization edged up to 76.7 percent in May, after posting a similar increase in April.
- (1000 ET/1400 GMT) The National Association of Home Builders (NAHB) is expected to report that U.S. Housing Market Index remained unchanged at 70 in June.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending June 9.
- (1630 ET/2130 GMT) New Zealand will release its Business PMI index for the month of June. The index stood at 56.8 in the previous month.
Key Events Ahead
- (1145 ET/1545 GMT) FedTrade operation 30-year Fannie Mae / Freddie Mac securities
FX Beat
DXY: The dollar rebounded across the board on expectations of another Federal Reserve rate hike this year. The greenback against a basket of currencies traded 0.4 percent up at 97.32, having touched a low of 96.32 on Wednesday, it’s lowest since Nov 9. FxWirePro's Hourly Dollar Strength Index stood at -24.92 (Neutral) by 1100 GMT.
EUR/USD; The euro slumped to a 2-week low as the demand for the greenback strengthened following further tightening from the Federal Reserve at yesterday’s meeting. The European currency traded 0.5 percent down at 1.1161, having touched a low of 1.1153 earlier, its lowest since May 30. FxWirePro's Hourly Euro Strength Index stood at -54.24 (Bearish) by 1100 GMT. The upside remains capped by major resistance around 1.1300 and any break above that level will take the pair till 1.13660/1.14350. On the lower side, near term support is around 1.11500-1.1160 (trend line support and 21- EMA) and any break below will drag it down till 1.1100 (May 30 low)/1.10750 (May 18 low).
USD/JPY: The dollar rebounded from recent lows as the latest Fed decision to hike interest rates by 25 basis points and hawkish outlook, despite of the U.S. data disappointment, underpinned the greenback demand. The major rose 0.4 percent to 110.07, recovering from a low of 108.81 hit on Wednesday, its lowest since Apr. 20. FxWirePro's Hourly Yen Strength Index stood at 95.15 (Highly Bullish) by 1100 GMT. The pair is facing support at 108 and any break below will drag it down till 106.80. On the higher side, near term resistance is around 110.94 (21- EMA) will take it to next level till 111.71 /112.12 likely.
GBP/USD: Sterling recovered from downbeat retail sales led-declined after the Bank of England left its refi rate unchanged at 0.25 percent and the asset purchase facility at £435 billion, in line with market estimates. The major traded 0.2 percent up at 1.2775, having hit a low of 1.2635 on Friday, its weakest since Apr 18. FxWirePro's Hourly Sterling Strength Index stood at -82.28 (Slightly Bearish) by 1100 GMT. On the lower side, the near term support is around 1.2614 and any break below will drag it till 1.2585/ (200- day MA)/1.2470 (61.8% retracement of 1.21088 and 1.30470). The near term minor resistance in the 4 hour chart is around 1.2824 (89- EMA) and any break above will take the pair till 1.2840 (50% retracement of 1.30476 and 1.26359)/1.2890 (200 MA). Against the euro, the pound traded 0.6 percent up at 87.42 pence, having hit a 7-month low of 88.66 on Monday.
USD/CHF: The Swiss franc declined, extending losses for the seventh straight session as greenback rebounded on the back of rising U.S. Treasury yields. Swiss National Bank left its monetary policy unchanged; Sight deposit rate -0.75 percent, 3 month Libor -0.25 percent - 1.25 percent. The major trades 0.3 percent up at 0.9744, having touched a high of 0.9754 earlier, its highest since May 31. FxWirePro's Hourly Swiss Franc Strength Index stood at -90.17 (Slightly Bearish) by 1100 GMT. Technically the pair has been facing strong resistance around 0.97350 (21- EMA) and any close above will take it till 0.9780/0.9808 (May 30 high). On the lower side, major support is around 0.9615 and any break below will drag it down till 0.9580/0.9520 (161.8% retracement of 0.9614 and 0.97393).
AUD/USD: The Australian dollar edged down as the greenback gained across the board following a rise in the U.S. Treasury yields. The Aussie trades 0.2 percent down at 0.7578, hovering away from a high of 0.7635 hit on Wednesday, it’s strongest since Apr 3. FxWirePro's Hourly Aussie Strength Index stood at 131.23 (Highly Bullish) by 1100 GMT. On the lower side, near term support is around 0.7530 (200- day MA) and any break below will drag the pair till 0.7485 (21 – EMA)/0.7385 (61.8% retracement of 0.71599 and 0.77493) /0.7325/0.7300. The near term resistance is around 0.7650 and any break above targets 0.7700/0.7745.
Equities Recap
European shares declined for the second straight day as tumbling oil prices hit basic resources stocks, while the greenback rebounded on rising expectations of another Federal Reserve rate hike this year.
The pan-European STOXX 600 index lost 0.8 percent to 384.23 points, while the FTSEurofirst 300 index declined 0.8 percent to 1,510.20 points.
Britain's FTSE 100 trades 1.08 percent down at 7,393.60 points, while mid-cap FTSE 250 slumped 1.8 percent to 19,608.96 points.
Germany's DAX fell 1.0 percent at 12,677.28 points; France's CAC 40 trades 1.1 percent lower at 5,180.02 points.
Commodities Recap
Crude oil prices declined to six-week lows, weighed down by high global inventories and doubts about OPEC's ability to implement agreed production cuts. International benchmark Brent crude was trading flat at $46.89 per barrel by 1055 GMT, having hit a low of $46.71 earlier, its weakest since May 5. U.S. West Texas Intermediate traded 0.2 percent down at $44.55 a barrel, after falling as low as $44.35 earlier, its lowest since May 5.
Gold prices declined to a near three-week low earlier as a strong rebound in the greenback weakened the demand for safe-haven assets. Spot gold fell 0.1 percent to $1,258.75 per ounce by 1100 GMT, having hit a low of $1,256.74 earlier, its weakest since May 26. U.S. gold futures for August delivery fell 0.9 percent to $1,264.50 an ounce.
Treasuries Recap
The U.S. Treasuries lost after the Federal Reserve decided to hike the Fed funds rate by 25 basis points to 1.00-1.25 percent, despite a fall in the country’s consumer inflation. Also, expectations of a fall in the initial jobless claims, due later today weighed on safe-haven assets. The yield on the benchmark 10-year Treasury rose nearly 1-1/2 basis points to 2.15 percent, the super-long 30-year bond yields climbed 1 basis point to 2.79 percent and the yield on short-term 2-year note traded 1 basis point higher at 1.35 percent.
The UK gilts slumped after the Bank of England (BoE) kept the benchmark interest rate unchanged at the monetary policy meeting, held today. However, markets have largely shrugged off the lower-than-expected retail sales for the month of May, also released early today. Further, markets will remain keen to note the comments made by the central bank Governor Mark Carney, due on June 16 for detailed direction in the debt market. The yield on the benchmark 10-year gilts, jumped over 5 basis points to 0.98 percent, the super-long 30-year bond yields climbed 4-1/2 basis points to 1.68 percent and the yield on the short-term 2-year traded 5-1/2 basis points higher at 0.14 percent.
The Eurozone periphery bonds gained ahead of the zone’s consumer price inflation index (CPI), scheduled to be released on June 16. Also, the Eurogroup meetings, due on June 15 will render further direction to the debt market. The benchmark German 10-year bond yields, fell nearly 1 basis point to 0.25 percent, the French 10-year bond yields, remained flat at 0.60 percent, Irish 10-year bond yield plunged 7 basis points to 0.69 percent; however, Italian equivalent slumped 3-1/2 basis points to 1.94 percent, Netherlands 10-year bonds yield traded nearly 1 basis point lower at 0.48 percent, Portuguese equivalents nose-dived nearly 5 basis points to 2.88 percent and the Spanish 10-year yields traded 1-1/2 basis points lower at 1.41 percent.
The Japanese government bonds traded flat as investors wait to watch the Bank of Japan’s (BoJ) 2-day monetary policy decision, due to be unveiled on June 16. The benchmark 10-year bond yield, hovered around 0.05 percent, the long-term 30-year bond yields remained almost flat at 0.79 percent while the yield on the short-term 2-year note also traded steady at -0.11 percent.
The New Zealand bonds remained strongly upbeat at the time of closing after investors poured into safe-haven assets on the back of lower-than-expected gross domestic product (GDP) for the first quarter of this year, which overshadowed the interest rate hike by the United States Federal Reserve. At the time of closing, the yield on the benchmark 10-year bond, plunged 7-1/2 basis points to 2.74 percent, the yield on 7-year note slumped 6-1/2 basis points to 2.64 percent and the yield on short-term 2-year note also ended 1 basis point lower at 1.95 percent.
The Australian bonds rallied amid lingering inflation concerns even after the Federal Reserve raised its benchmark interest rate by 25 basis points to 1.00-1.25 percent, suggesting that weak readings are unlikely to persist in the near-term. The yield on the benchmark 10-year Treasury note, slumped 4-1/2 basis points to 2.37 percent, the yield on 15-year note plunged nearly 6 basis points to 2.73 percent while the yield on short-term 5-year traded flat at 1.66 percent.
